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Five Connected With Connecticut Energy Cooperative Charged With Misusing Funds

Federal Courthouse in New Haven.
Federal Courthouse in New Haven. Photo Credit: U.S. Federal Courthouses

Five people connected with a southeastern Connecticut energy cooperate are facing charges for allegedly misappropriating millions of federal funds to live lavish lifestyles.

Two indictments were returned in New Haven federal court charging five people connected to the Connecticut Municipal Energy Corporation (CMEEC). According to U.S. Attorney John Durham, between 2010 and 2015, CMEEC received more than $9 million from the U.S. Department of Energy.

Those charged with misappropriating funds include:

  • Drew Rankin, 57, of Columbia, who was the CEO of CMEEC;
  • James Sullivan, 52, of Norwich, who was a City of Norwich representative and chairperson of the CMEEC Board of Directors;
  • John Bilda, 54, of Norwich, who was a City of Norwich representative on the CMEEC Board of Directors and employee of the City of Norwich;
  • Edward DeMuzzio, 77, of Groton, who was a City of Groton representative and the secretary of the CMEEC Board of Directors, and;
  • Edward Pryor, 62, of Groton, who is the CFO of CMEEC.

The first indictment alleges that the five “planned, organized and directed lavish trips outside of Connecticut, including trips to the Kentucky Derby in 2015 and 2016, and to a luxury golf resort in West Virginia in 2015.  These trips did not relate to CMEEC business or CMEEC Member business, but were intended to personally benefit, compensate and reward the co-conspirators, their family members, friends and associates.”

The costs for those trips was more than $800,000, which included travel expenses, private flights, first-class hotel accommodations, meals, tickets to sporting events and other lavish things. It is alleged that the five did not seek the approval of the CMEEC Board of Directors before spending the money, which was excess revenue earmarked to be returned to local towns to keep electricity costs stable for customers.

Durham said that the CMEEC Board of Directors had committees, including the compensation committee, which was responsible for determining the compensation of Rankin as CMEEC’s CEO.  Bilda and DeMuzzio were representatives on the compensation committee.  On Feb. 25, 2016, Bilda made a motion at a CMEEC Board of Directors meeting to modify the compensation package of Rankin retroactive to Jan. 1, 2016.  The motion was seconded by DeMuzzio.  The modification increased Rankin’s overall compensation.

Rankin also allegedly lied to reporters, underestimating the cost of trips, when approached by investigators. After the trips were known to the general public, CMEEC canceled a reservation it had made for the 2017 Kentucky Derby, and was refunded only approximately $90,000 of the $298,960 it had prepaid for the trip in May 2016.

The first indictment charges each of the five with one count of conspiracy and three counts of theft concerning a program receiving federal funds. They face decades in prison if they are convicted.

The second indictment charges Rankin and Sullivan with engaging in a conspiracy to pay for Sullivan’s personal expenses with CMEEC funds.  It is alleged that Sullivan submitted his personal expenses on a regular basis via “expense reports” that Rankin approved and directed to be paid out of CMEEC funds.

All five have been arraigned, pleaded not guilty and are released on $100,000 bond.

Between January 2012 and August 2015, Rankin authorized the payment of numerous personal expenses for Sullivan, including airfare for dozens of flights Sullivan took, trips for Sullivan and his family members to attend the Kentucky Derby in 2013, 2014, and 2015, and airfare for a flight for Sullivan’s wife to travel to Key West, Florida, in December 2014.

The second indictment charges Rankin and Sullivan with one count of conspiracy and three counts of theft concerning a program receiving federal funds.

“CMEEC has received millions of dollars in grants from the U.S. Department of Energy,” Durham said. “Instead of protecting these funds and returning excess revenue to member towns and ratepayers, these defendants are alleged to have used the CMEEC Margin Account as a secret slush fund to pay for lavish junkets for themselves and their family and friends, as well as for other inappropriate expenses. The U.S. Attorney’s Office is committed to working with our federal law enforcement partners to safeguard public funds and prosecute those who steal from the public.”

“At a time when there are Connecticut residents struggling to afford basic necessities such as food, housing and electricity, the FBI and its law enforcement partners will continue to hold public officials, and those with responsibility for public funds, accountable for fraud, waste and abuse of those funds,” said FBI Special Agent in Charge Brian Turner.

“The criminal conduct alleged in the indictment is yet another example of those abusing high-level corporate positions to personally benefit at the expense of others,” said IRS Criminal Investigation Special Agent in Charge Kristina O’Connell. “The funds CMEEC allegedly misappropriated for these extravagant trips was motivated by greed, to the detriment of the member towns and ratepayers."

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